California is a community property state and this makes the division of assets in a divorce relatively easy to understand. Courts cut marital property down the middle and award half to each spouse. As in most states, however, couples have the right to override this by reaching an agreement on their own as to how they’re going to divide their assets.
Under California law, marriage is a “community,” a legal entity that consists of two spouses equally sharing all they earn and purchase and debts they incur. Beginning with the date of the wedding, both spouses – or the community -- jointly own almost everything they acquire, whether it's a new toothbrush or a home or automobile. It doesn’t matter how a particular asset is titled. The determining factor regarding community property is not which spouse bought it because both spouse’s incomes belong to the community. The critical factor is when the asset was acquired. If it was acquired before the marriage, it's generally not community property.
California also recognizes the concept of quasi-community property. If you and your spouse were married in Oregon, purchased a home there, moved south over the border into California, then divorced, your Oregon home would be quasi-community property. The marital community owns it, even though Oregon is not a community property state. Both spouses own half of it.
Exceptions to Community Property
If you inherit property while you’re married, it’s your sole and separate asset. This also applies to gifts made specifically to you, as opposed to you and your spouse, at any point during your marriage. Gifts and bequests do not belong to the marital community. Contract law supersedes family law in California, so if you waive an interest in community property through a prenuptial or post-nuptial agreement, the courts will honor this. Absent a prenup, it’s possible to unintentionally change your separate property into community property if you don’t take steps to keep it segregated from the marital community. For example, if you owned a house before you got married, then you and your spouse used it as your home during your marriage and she contributed to its upkeep and the mortgage payments, most judges will consider that you changed this separate property into community property.
How Community Property Is Divided
California judges achieve equal division of assets in a variety of ways. They might order the liquidation of cash accounts and saleable assets, then split the proceeds 50/50. Alternatively, courts might order that one spouse receives three specific assets with a total worth of $300,000, and the other spouse might receive the marital home with $300,000 in equity; the assets allotted to each spouse are equal in worth. Buyouts are another common solution. If the only marital asset is a couple’s home and it has $100,000 in equity, a judge might award the house to one spouse and order him to pay the other a $50,000 cash payment for her share. This is usually achieved through a refinance.